Berkeley City Council to reassess affordable housing fee

Brian Ly/Staff

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The shortage of affordable housing in Berkeley is a long-standing problem — and one that the City Council will take up again Tuesday night.

Currently, a city ordinance addresses the low-income housing shortage by giving apartment developers the choice of incorporating affordable units into their building plans or paying a fee to the city to help finance separate affordable housing projects. The city is looking to encourage the latter, which would allow local government to have a greater hand in regulating the supply of low-income housing.

Although affordable housing units are technically being created through either option, Councilmember Jesse Arreguin is concerned about the extent to which the city is able to oversee developers building and allocating the units themselves.

“We need to make sure developers are meeting (their) obligations and are actually renting to low-income tenants,” Arreguin said.”

After the City Council approved the Affordable Housing Mitigation Fee in October, it found that all developers chose the first option — making 10 percent of their units accessible to low-income tenants — over the second option of paying the fee of $28,000 per apartment unit. The fees would have been pooled into the city’s Housing Trust Fund, which also gathers money from government grants to help finance local affordable housing projects.

As of now, there are at least eight housing projects in Berkeley completely for low-income tenants, all of which were at least partially financed by the fund — which typically holds $1 million to $3 million at a given time, Arreguin said.

In February, the council lowered the fee’s amount by $8,000 per unit for developers who submit plans to build by early next fall, in hopes that the lower fee would encourage developers to pay into the fund.

Still, only one project has agreed to pay the fee.

“$28,000 is high,” said developer William Schrader Jr., who agreed to pay the fee for his project, The Durant. “It certainly made it easier for me to make a decision when the city lowered (the fee).”

Housing Advisory Commissioner Igor Tregub, however, said that $28,000 should be the minimum if the city wants to maximize the creation of affordable housing, although he appreciates efforts to get developers to pay into the fund.

“What we have is a step in the right direction,” Tregub said. “But I certainly would like to see more.”

At Tuesday’s meeting, council members will discuss changes to the fee, including allowing developers to pay over the course of several years rather than all at once and adjusting the fee over time to account for inflation.

Also to be discussed is a loophole that enables developers to avoid paying the fee by citing a “hardship.” There is no concrete definition of what a hardship entails, allowing developers who should not be exempt from the fee to dodge it entirely, Arreguin said.

Berkeley’s median rent, about $1,250 per month, is above both the Alameda County and national medians, according to a 2013 report by the city’s Rent Stabilization Board. In 2010, the annual income remaining to low-income tenants in the Bay Area after paying median rent was only approximately $10,500, the report said.

Alison Fu covers city news. Contact her at [email protected].